Taxing Harvard Should Just Be the Tip of the Iceberg
Kudos are certainly in order for Massachusetts legislators led by State Representative Paul Kujawski (D-Webster) that are finally calling to pierce the non-profit fig leaf draped over the vast multinational corporations that several area private universities have become and tax all colleges with endowments over $1 billion.
Amherst College, Boston College, Boston University, Massachusetts Institute of Technology, Smith College, Tufts University, Wellesley College, and Williams College all have endowments that pass that benchmark. But the 900-pound gorilla of the American higher education landscape is Harvard University - with an endowment now in excess of $34 billion. An amount that surpasses the tax bases of several impoverished nations.
Harvard, naturally, claims that the $1.8 million a year that it gives to the City of Boston in the form of a PiLoT (Payment in Lieu of Taxes), close to $3 million a year that it gives to its main base - the City of Cambridge - and $3.8 million a year to the Town of Watertown (agreed to after it sneakily purchased 30 acres at the Arsenal back in 2001) is plenty to fulfill its civic duty. These amounts are pathetically small, but probably the best that relatively weak local governments have been able to negotiate with an institution that can afford the nastiest lawyers money can buy.
However, none of the colleges in question give anything to Massachusetts state government at a time of budgetary crisis brought on by the very bad investment practices that have benefited institutions with huge stock and bond portfolios. Institutions like Harvard and the rest.
Now doubtless such a bill will never be passed in its original form, and the powerful political and economic interests behind colleges like Harvard will line up at the State House to pummel it into useless pablum. But it's worth thinking about the limits of this kind of strategy.
Let's say the bill were to pass in some form, and state government got its tax money from giant non-profits. First, only a 2.5 percent assessment is being proposed - not a normal corporate tax schedule. Second, the State Senate is currently supporting $312 million in corporate tax cuts and $53 million in tax cuts to financial institutions, at the very moment when it finds itself over $1 billion short for the next fiscal year; so the legislature doesn't exactly have its priorities straight overall.
Finally, the bill misses the main problem with private colleges that have endowments of over $1 billion. The problem is that we allow private colleges in the United States. Most industrialized nations have fully public systems of higher education. Be they elite schools like the Sorbonne in France, or more scruffy working-class schools like the CEGEP system of community colleges in Quebec, colleges in most countries are controlled by governments in the public interest, and their budgets - while often controlled by college administration - are funded directly out of the public tax pool.
So what Massachusetts really needs to do is to find a way to make Harvard and all the other colleges in question part of the public higher education system. And in the process seize the endowments of these "corporations in university clothing" and redistribute them for the greater good of the people of the Commonwealth. While they're at it, the state government could then take over all the private high schools in the state, too. A nice place to put all the extra money thus infused into government coffers would indeed be the public education system from kindergarten on up. We could fix all the crumbling facilities. Make sure that every student got a decent education, and guarantee that said education would be taxpayer funded all the way to the doctorate level for those that qualified.
This is all too big a conversation to be properly fleshed out in a single editorial, but it brings to mind a funny thought. If such reforms were to be enacted, instead of Harvard and MIT, we'd have a new public university. UMass Cambridge, the flagship of a revived public education system.
Now that would be a legislative reform that this publication could really get behind.